Ola and Uber suspend surge pricing in Delhi after government warning

Ride-sharing services Uber and Ola have announced that they will temporarily suspend surge pricing after receiving a warning from Delhi's Chief Minister Arvind Kejriwal. The city is trialling an odd-even rule to combat congestion on its roads, and has set prescribed fares for taxi services at ₹16 per km for air-conditioned cabs and ₹14 for those without air conditioning.

To deal with the increased demand, Uber and Ola have turned to surge pricing to get more drivers on the roads, with the former routinely increasing fares by five times the normal amount, which comes out to ₹35 per kilometer for the entry-level UberGO.

The move drew the government's ire, with anyone found to be flouting the prescribed fares risking losing their driving license and their car.

Strict action, incl permit cancellation n impounding vehicle, to be taken against taxis which charge rates more than govt prescribed rates

In a statement to Livemint, Gagan Bhatia, General Manager for Uber North said:

Given the threat of the Delhi government to cancel permits and impound vehicles of our driver partners, we are temporarily suspending surge in Delhi with immediate effect. We hope to work with the government to keep Delhi moving especially during this time when the citizens need us the most.

Not surging is saying we should be just like a taxi and be unreliable when people need us most.

This isn't the first instance where taxi aggregators have faced off against the government. Last week, Karnataka's transport division seized more than 20 vehicles belonging to Uber and Ola drivers, saying that they did not conform to the state's recent ruling where it banned surce pricing.

The ruling, which came into effect on April 2, says that taxi services cannot set fares higher than what's prescribed by the government, which is ₹19.50 per km for air-conditioned cabs and ₹14.50 for ones without air conditioning. While those fares are far higher than what Uber and Ola charge, a 3X surge on UberBlack would automatically be above the prescribed limit.

With the government looking out for people's interests and taxi aggregators continuing to say that surge pricing is essential to their businesses, it will be interesting to see how things turn out. What do you guys think of the move by the government to curb surge pricing?